What impact does an expansionary fiscal policy action, such as a tax cut, generally have on consumer and business spending?(1 point)
Responses
spending decreases for both businesses and consumers
spending decreases for both businesses and consumers
spending increases for businesses and decreases for consumers
spending increases for businesses and decreases for consumers
spending decreases for businesses and increases for consumers
spending decreases for businesses and increases for consumers
spending increases for both businesses and consumers
whats the right answer
The correct answer is:
spending increases for both businesses and consumers
The correct answer is: spending increases for both businesses and consumers.
The correct answer is: spending increases for both businesses and consumers.
An expansionary fiscal policy action, such as a tax cut, generally stimulates economic growth by increasing disposable income for both consumers and businesses. When the government reduces taxes, consumers have more money available to spend on goods and services. This increased consumer spending leads to greater demand for products, which can prompt businesses to increase their production to meet the demand. As a result, both consumer and business spending usually increase under an expansionary fiscal policy action like a tax cut.